Let's walk through each of these reasons in detail:
At the Beginning - Discovery Stage
These are bid change reasons you can expect to see for newly created ad groups or keywords.
Starter bid; Initial Bid
This reason is given when bid automation is first started on a campaign. You will generally see it displayed during the first bid change post setting MACS or if a keyword/ad group goes back to a low data state.
Detected low click data. Using the starter bid until we get more data
If, after a few days, we still do not see enough clicks for the keyword, we will continue using your starter bid.
Using the started bid until we get more data
If we continue to see low click data and the campaign ACoS is higher than the MACS, we will leave your bid at the starter bid
Detected sufficient click data, transitioning to a value bid
When we have enough click data for a keyword, we will start the process of moving your bid from the started bid to the calculated value-based bid.
low click data, increasing bid by X%
During discovery stage, as we are working to determine the true value, we incrementally increase the bid to obtain more clicks. The percent of increase will depend on how high MACS are set. A higher MACS will result in faster discovery period.
As More Data Trickles In - Value Based Bids
Adjusted estimate of click value
Some criteria considered during this stage:
Conversion rate: If the conversion rate (from clicks to orders) goes up, then we will raise the bid to take advantage of it. If the conversion rate goes down, then we will lower the bid. This is because we have to buy a lot more clicks, with the same amount of money, to get a sale.
Estimated net ad revenue: If revenue per order increases (a price increase or the average number of units per order increased), bids will be increased. And if it decreases, we will decrease the bid.
Other Reasons You Might Encounter
...increasing bid by X% to generate more clicks
In the case of keywords that are not generating enough clicks, we will increase bids by a certain percentage to try and give them more exposure. We will only do this in campaigns where the MACS is higher than the actual ACoS.
An external change occurred to either the bid amount or MACS, re-setting the bid
We display this reason in 2 instances:
If the MACS is changed for a given campaign, then we use the new ACOS to recalculate the value-based bid and display this reason.
If the bid for a keyword is manually changed through Seller Central, then we will recalculate the bid and start moving the manually changed value towards the value-based bid. Remember: manually changing bids hurts automation and delays optimization.
Moving bid towards X but hit the limit on the maximum daily rate of change
To prevent drastic shifts in spend, we will only change your bid by a certain amount on each run. If a calculated bid is higher than the rate cap allows, we will display this reason.
Moving bid towards X but hit ceiling(floor) of Y
If the calculated bid is too high based on your category, we will set it to the ceiling and display this reason. We will do the same if the calculated bid is too low based on the bid floor set. The default bid floor price is $0.05 and can be changed on the Campaign Performance page.
Detected increase in clicks, holding bid at current level before raising further.
Even if you don't always see the bid change, we are always evaluating what's best for you. We might hold the bid steady at a certain level if we find enough data is trickling in.
NEXT: Bidding Algorithm: FAQ